cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Experienced Member

Accounts Receivable and accounts payable

I have a customer that is also a vendor at times.  He owes me on an invoice (AR), and now I owe him an amount (AP).  Is it possible to somehow apply/deduct the amount he owes me from the amount I owe him, then just pay him the balance?  Really not sure how to even explain this.

Example:  he owes me $2,000.   I owe him $4,000.  Can I apply the $2,000 he owes me as a payment toward the $4,000, then send him the remaining $2,000?  Is there a way to record this to keep records straight and mark invoices paid correctly?  

Solved
Best answer 07-18-2019

Accepted Solutions
Moderator

Re: Accounts Receivable and accounts payable

You've come to the right place, Mike1141.

 

I'd be more than happy to share some information on how to handle the scenario that you have in managing your transactions.

 

To start, you can create a clearing account that will be used in receiving the invoice payment and paying the Bill. The balance will be paid on the account you'd used in paying the vendor.

 

To create a clearing account, here's how:

  1. Go to Lists menu at the top.
  2. Select Chart of Accounts.
  3. Right click anywhere in the Chart of Accounts, then select New.
  4. In the Add New Account window, select the Bank radio button.
  5. Click Continue.
  6. In the Account Name field, enter Clearing Account, Barter Account or Wash Account.
  7. Do NOT enter an opening balance.
  8. Click Save & Close.

Next, receive invoice payment using the clearing account created.

 

Then, upon paying the Bill, use the clearing account.

 

Once done, pay the Bill for the remaining balance.

 

For more detailed information about this process, you can read these articles:

For additional reference, you may find these resources in the future helpful:

 

This will point you in the right direction, Mike1141. Please keep me posted on your results with this here, I'm always here to offer more help.

1 Comment
Moderator

Re: Accounts Receivable and accounts payable

You've come to the right place, Mike1141.

 

I'd be more than happy to share some information on how to handle the scenario that you have in managing your transactions.

 

To start, you can create a clearing account that will be used in receiving the invoice payment and paying the Bill. The balance will be paid on the account you'd used in paying the vendor.

 

To create a clearing account, here's how:

  1. Go to Lists menu at the top.
  2. Select Chart of Accounts.
  3. Right click anywhere in the Chart of Accounts, then select New.
  4. In the Add New Account window, select the Bank radio button.
  5. Click Continue.
  6. In the Account Name field, enter Clearing Account, Barter Account or Wash Account.
  7. Do NOT enter an opening balance.
  8. Click Save & Close.

Next, receive invoice payment using the clearing account created.

 

Then, upon paying the Bill, use the clearing account.

 

Once done, pay the Bill for the remaining balance.

 

For more detailed information about this process, you can read these articles:

For additional reference, you may find these resources in the future helpful:

 

This will point you in the right direction, Mike1141. Please keep me posted on your results with this here, I'm always here to offer more help.